System Vice President of Sourcing and Vendor Management
SSM Health
August 2023- The Journal of Healthcare Contracting
Brad Forth is the System Vice President of Sourcing and Vendor Management at SSM Health, which provides health care to communities across Illinois, Missouri, Oklahoma and Wisconsin. The IDN has a centralized sourcing contracting function, and supply chain is responsible for all non-FTE labor expense for the organization. Forth’s team covers everything from traditional med-surg to implant, capital medical equipment, lab, pharmacy, IT, and purchased services.
What are some stories of recent supply chain wins/successful projects you can share?
I’ve been here for four years, and in that time, we’ve driven a lot of change through the organization to establish a functional foundation that is enabling our successes. Historically, we had a centralized sourcing and contracting “function-ish.” We would put together system agreements, but Oklahoma may have a carve-out rebate, or Wisconsin may have negotiated a local agreement with that same supplier.
When you looked outside of the traditional supply chain space, the team was selective on what they were supporting. They would support some purchased services, or bigger categories, but they hadn’t holistically managed that spend. Overall, there were no processes or controls to really manage our spend or align it to defined standards.
We have changed that significantly. We are now contracting centrally. We’ve built a team filled with amazing talent. The business rules and processes that we implemented to centralize our function have really enabled us to intentionally engage our end-users to collaboratively manage our spend and minimize unnecessary variation.
Getting the foundational pieces operational was extremely important. They enable the successes that we’ve been able
to have.
If you look historically at this function, it generated anywhere between $25 to $30 million in annualized value for the organization. Since we’ve implemented our changes, the last two years, we’ve delivered over $100 million each year. So, 4x growth in the value that we’re delivering.
Whereas historically, the team would maybe do 500 contracts a year and the annualized spend under those was $300 – $400 million, last year, we did close to 2,000 contracts, and the annualized spend flowing through those was $1.5 billion. So, we’re touching a lot more and really managing more spend, which is enabling us to partner with our clinicians, physicians, and business owners to generate a lot of wins.
What has sourcing been like this year compared to the last few?
Sourcing hasn’t changed all that much, but the challenges we’re facing are different. You have the constants of aligning with our clinical programs or our service lines to support their defined standards of care: identifying key attributes in the products or services that they need, verifying clinical acceptability, and working to put together a strategy that drives competitive friction to determine what the market will bear.
The new challenges that we are facing are around supply assurance and mitigating supplier reactions, or predictions, to inflation. Historically suppliers wouldn’t come midterm looking for price increases or insist on building guaranteed year-over-year price increases into agreements. They are now. The team has gotten really comfortable with those conversations and deploying mitigating strategies. The team is also now spending an inordinate amount of time sourcing clinically acceptable subs necessitated by all of the backorders. The team is working to balance these headwinds with our strategic efforts, but necessary to support the immediate needs of our caregivers.
Besides value, what are some other ways you measure success for your team?
We do maintain qualitative type metrics beyond value. We have metrics around productivity, number of contracting actions per FTE, number of new requests received and completed.
But I don’t really consider any of those a measure of success. One of the key ways I measure success is through our retention rate and team engagement. If we have a motivated workforce that’s excited to be here, we’re delivering on value, and we have low turnover, that tells me we’re doing something right. I sit back and watch how the team engages with each other, how they engage with our end users, how our end users engage with them, to get a sense of how things are going. If I can see positive, respectful, strategic engagements, I’m super happy and view that as success.
Sidebar:
SUPPLIER RELATIONS
In your experience, what are some keys to a successful partnership between suppliers and providers?
At the core, the supplier needs to have a true desire to support us in caring for the communities that we’re blessed to serve.
There has to be a focus on patient outcomes, care for the community or efforts around population health. Then deploying a solutions-based approach to align and truly support us.
I recognize our supplier’s motivation is to sell. I don’t begrudge them for that. That is their job, and that’s what they are tasked to do, but that can’t be their North Star. If it is, that’s where relationships start to get sideways.